Poshmark IPO Review

Poshmark Inc. (NASDAQ:POSH), founded in 2011, calls itself a social marketplace focused on clothing and accessories. It primarily links buyers and sellers and generates revenue by taking 20 percent of every item sold through its platform. Sellers can list both new and used merchandise, ranging from jackets and shoes to phone cases and sunglasses.

The Redwood City, Calif-based shopping platform for second-hand goods went public last Wednesday by pricing its shares at $42, above its expectations in the range of $35 to $39 per share. POSH stock skyrocketed more than 145 percent in its market debut last week and closed at $101.50 on the first trading day, representing a surge of more than two-folds from its IPO price.

The blockbuster IPO shows investors’ faith in Poshmark, which went public at a time when people are increasingly preferring online shopping due to in-store buying restrictions amid the Covid-19 pandemic.

Meanwhile, the popularity of online marketplaces for used goods has been increasing lately, with several players trying to boost their shares in the online resale space. However, Poshmark stands out from the rest as its platform is more like a social commerce website, which allows buyers and sellers to informally chat with each other and discuss a certain item.

The company had nearly 32 million active users, 6.2 million active buyers, and 4.5 million active sellers, as of September 30. Poshmark counts those as active users who have logged into the site during the past 12 months, active buyers as those who have bought at least one item during the past year, and active sellers as those who have listed a product during the same period.

If we look at the financial performance, POSH generated revenue of $192.8 million during the first three quarters of 2020, representing year-over-year growth of 28 percent from the comparable quarters of 2019.